Economy is weak and so the credit market is tight so the Fed is pumping money so that Banks can start lending. But Banks refuse to lend because the economy is weak. That is what I learned from a Bank Officer of a major Bank. They are afraid to lend...to those who need it to keep the economy going....
Just watched Benoît Mandelbrot and Had Nassim Taleb (Black Swan) in PBS...very interesting analysis of the present crisis. Reminded me of optimization design in chemical processing that causes serious instability with multiple but small perturbations....
cosmictraveler
10-21-08, 06:58 PM
The banks are lending but only to well qualified borrowers so that is going to help out better than not lending at all as you state.
Hear more on the bogus economic model: http://www.youtube.com/watch?v=ABXPICWjFIo
The banks are lending but only to well qualified borrowers so that is going to help out better than not lending at all as you state.
They said on TV that most well qualified borrower are the ones that do not need the money. Those who do need the money, may not be really qualified ....under strict criteria like asset base...
cosmictraveler
10-21-08, 07:03 PM
That is why many problems started in the first place, lending to those who can't repay what they are lent. :shrug:
But they were within the risk band...by those statisticians :confused:
cosmictraveler
10-22-08, 10:14 AM
But they were within the risk band...by those statisticians :confused:
Which risk band, the one before the frauds were found out about or the ones after they were exposed? If they lend money to those who can't afford to repay the loans back then we will be revisiting this same scenario once again in a year or so. You can't just throw good money after bad all of the time for it will come up behind you and bite your ass!
My best guess is they are waiting for results of the Presidential election. After that they will lend accordingly.
So, what is our real GDP now? Mind you GDP is mostly the spending part of consumers and the government.